When is a stakeholder not a stakeholder?

An email dropped into my mailbox this morning, from bedmaker Warren Evans. I bought some bunk beds from them a couple of years ago, and they’re extremely good beds, so I tend to read the things they send me. They’re also a very ethical and sustainable company, with a clutch of awards for green business.

This email was a bit different, in that it didn’t try to sell me a bed. Warren Evans is raising cash for expansion, but instead of going to the banks, they’re asking customers to put up the money, in the form of a retail bond. You can see the details on their bond website, but the headline is that they’re paying 7.5% per annum over three years to anyone willing to put a minimum of £750 into the company. That’s a lot better than the average bank account at the moment.

I think this is an incredibly interesting move. I’ve always had a problem with the fact that public companies have a duty to maximise profits for their shareholders, as for me this means that what they’re NOT doing is putting their customers first. Of course, sometimes customers are shareholders as well, but I’m not sure that private investors wield much power in the markets, when compared to the institutional investors such as pension providers and hedge funds. So in a climate where utility companies are sending their prices through the roof while pretending that they still care about their (cold) customers, it’s rather refreshing to see a company bypassing the usual routes for raising money and going straight to their customers, instead.

Before you accuse me of being incredibly naive, of course I know that there are a million cynical thoughts that could apply to this. Maybe the banks turned them down for a loan. The bond is unsecured, so there’s no guarantee you won’t lose your money completely. The bond is open to corporate investors as well as private, so it’s not turning its back completely on the financial markets. And the bond does not buy the investor an actual stake in the company – it’s essentially an unsecured loan.

But the thing that struck me most of all was this: in marketing, we’re used to describing customers as stakeholders, brand ambassadors, brand advocates and so on. Companies spend thousands trying to promote or buy customers’ loyalty and chasing likes and shares and recommendations. But really, once a customer has bought a product, can we call them a stakeholder? I would argue that the interest they have in the company is minimal, at best. But if you have thousands of people who have bought your products, and know how good they are, and also have a vested interest in your company doing well, in the form of this bond? Well, they could become real brand ambassadors, willing to actively promote the business. In terms of bringing together your marketing and financial goals, this is pretty nifty.

I’ve recommended Warren Evans to a couple of people in the past few years, mostly because they’ve asked where we got our beds from. If I put some money into this bond, I’ll probably do it quite a lot more.

(P.S. They really are very good beds. And I say that purely because…well, they are.)